The Hindu : Business : Initiatives to make India global hub for gems and auto parts

Online edition of India's National Newspaper
Saturday, Apr 08, 2006

Business

Business

Initiatives to make India global hub for gems and auto parts

Sushma Ramchandran

Product and Market Focus schemes to replace Target Plus; EPCG terms eased

— PHOTO: Shanker Chakravarty

EXPORT AND FLOURISH: Kamal Nath, Minister for Commerce and Industry (centre) with Minister of State for Industry Ashwini Kumar (left) and Jairam Ramesh, Minister of State for Commerce (right) releases the Annual Supplement to the Foreign Trade Policy 2004-2009.

NEW DELHI: In a series of fresh trade initiatives announced here on Friday, the government has given incentives to make India a global hub for gems and jewellery as well as auto components while tailoring export schemes to create more jobs.

Building on the recent export boom leading up to the $101 billion of exports recorded in the last fiscal, the aim is now to peg growth to reach $120 billion in 2006-07.

Commerce and Industry Minister, Kamal Nath, who released the new initiatives in the annual supplement to the long-term (2004-09) trade policy, launched two new schemes aimed at creating more jobs in rural and semi-urban areas along with diversifying the trade basket to emerging markets of Africa and Latin America. The Focus Product and Focus Market schemes will replace the Target Plus which had earlier proved successful in giving a boost to exports.

Similarly, in a bid to take the benefits of foreign trade to rural areas, the Krishi Vishesh Upaj Yojana is being expanded to include village and cottage industries while being renamed as the Krishi Vishesh Upaj Aur Gram Udyog Yojana.

Mr. Kamal Nath also announced that the incidence of unrebated service tax and fringe benefit tax would be factored in the various duty neutralisation and remission schemes. Besides, interest would be paid on delayed payments of refunds to ensure accountability and reduced delays.

Describing the surge in export growth as a "grand leap forward", Mr. Nath said that within just two years the country's exports had jumped from $63 billion to $101 billion. Merchandise trade rose by 26 per cent in 2004-05 and 25 per cent in the following year. Simultaneously imports have risen by 32 per cent to reach $140 billion. On whether the government was concerned over the high trade deficit, he said the oil bill accounted for $43 billion of imports, leaving non-oil imports at $97 billion. "On the non-oil front, therefore, we have a positive balance of trade", he said.

Outlining changes in key export incentive schemes, he said the advance licensing scheme, which allows imports of inputs before effecting exports and Duty Free Replenishment Certificate which allows transfer of import entitlements, have been clubbed to launch a new scheme called "duty free import authorisation scheme". The scheme will be effective from May 1, and the DFRC scheme will be phased out by April 30.

Detailing a slew of measures to make India a global hub for gems and jewellery, Mr. Kamal Nath said "the diamond trade, which was concentrated in Antwerp, is moving out to Dubai and Tel Aviv. I want Mumbai to be right up there and not lose out to fellow Asian cities". The measures include allowing import of precious metal scrap and used jewellery for melting, refining and re-export of jewellery and reduction in value addition norm on export of gold and silver jewellery in view of the rise in world bullion prices.

As for making India a hub for auto components, he said import of new vehicles for R&D activities by auto components manufacturers would be allowed without testing for fitness on Indian roads.

To promote services exports which provide jobs in urban areas, he said, services exports in Indian rupees would also qualify for benefits under the "Served from India" scheme. Also, benefits under the scheme earned by one service provider of a group company can now be utilised by another group firm, including hotels. The supplement has introduced certain flexibilities in conditions relating to maintaining export performance under the Export Promotion Capital Goods scheme. It has also been decided to extend the period of export obligation fulfilment by another two years linked to some conditions.

Explaining the details of the Focus Product scheme, Mr. Kamal Nath said it aimed to give a thrust to manufacture and export of industrial goods which could generate large employment per unit of investment.

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